General Motors (GM) is facing significant financial challenges in China, with sales down 19% and losses totaling $347 million over the first nine months of the year. This downturn has led experts to question how much longer GM can sustain its operations in the country.
The Chinese market’s shift towards electric vehicles (EVs) has decimated foreign automakers, including GM. Once the company’s lifeblood, China now represents a “money pit” due to declining sales and profits. According to Jeff Schuster, global vice president of automotive research at GlobalData, every international brand is suffering in China.
While some Western automakers have managed to maintain profitability in China, most are struggling. Even GM CEO Mary Barra has acknowledged the challenges facing Western automakers in the country, stating that it’s a “very challenging environment.” However, not everyone shares her optimism.
Michael Dunne, an auto industry consultant with extensive experience working with Western automakers in China, believes that GM will likely be forced to exit the market within the next five years. He notes that Chinese consumers now prefer local brands over foreign ones, largely due to government policy and incentives promoting EVs and plug-in hybrids.
As recently as 2020, Chinese automakers held only 38% of the market share, but they have since surged to around 70%. Foreign brands, including GM, are struggling to compete with affordable EVs. Stellantis’ joint venture in China filed for bankruptcy last year after years of losses.
The biggest challenge facing Western automakers is China’s rapid transition to electric vehicles. The country has introduced policies and incentives that have driven buyers towards EVs, outpacing foreign companies like GM. Bill Russo, head of Automobility and former Chrysler executive, believes that Western automakers underestimated the shift in the market, prioritizing short-term profitability over long-term viability.
Russo emphasizes that even if the Trump administration reduces regulations on US EV buyers, American automakers will still need to adapt to compete with Chinese companies. Losing China would be catastrophic for any automotive enterprise, he notes.
Source: https://edition.cnn.com/2024/12/17/cars/automakers-china-losses/index.html